The Tel Aviv Labor Court decided Tuesday to keep in place an order freezing NIS 400,000 in Kadima assets pending the resolution of a civil lawsuit against the party by its former treasurer.

In separate litigation, Kadima had previously accused its former treasurer, Yitzhak Hadad, of embezzling funds and he had been arrested and questioned by the police.

On January 16, 2012, Hadad sued Kadima for NIS 2,590,286 for termination, including breach of contract and an assortment of other alleged breaches.

Hadad claimed that he was formally employed by Kadima and entitled to all of the benefits due a terminated employee in his circumstances.

Kadima said that Hadad was an independent contractor, who continued to run his own operations on the side.

The party argued that since there was no employee-employer relationship, Hadad cannot claim termination benefits only granted to employees.

Upon filing suit, Hadad requested and obtained a freeze on certain Kadima party funds being held by a third party pending resolution of his lawsuit.

The party then filed a request to release the funds, arguing that otherwise its capacity to campaign during the election would be harmed.

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Kadima went further saying that this harm would constitute a harm beyond the party, as it would be harm Israeli democracy in limiting Israeli citizens access to Kadima and its platform.

Hadad was the party’s treasurer from 2005 until the end of 2011.

Kadima suggested three alternatives to the current asset freeze, including placing a lien on certain Kadima property or placing a lien on payables due to Kadima from various other parties.

Hadad objected to these alternatives, explaining that the payables are in dispute or may not be paid, that the property was worth much less than the value Kadima had ascribed to it and that the party had refused to have the property properly evaluated.

The court found that since Kadima is about to receive NIS 22 million in public funds, claims that it will be completely unable to campaign and of the resultant harm to Israeli democracy were significantly overstated.

The court also agreed with Hadad’s objections and found that none of Kadima’s alternatives to the asset freeze were concrete or substantial enough.

However, acknowledging the significance of the sum being frozen, the court reduced the sum to NIS 400,000.

Kadima officials responded that the party would receive a much smaller sum in public funds due to the departure of seven Kadima MKs to the new Tzipi Livni Party. They noted that Hadad was still being investigated by police and said his claims should be viewed accordingly.

“The party’s debts of more than NIS 30m. were accrued at the time that Tzipi Livni led Kadima,” a Kadima spokesman said.

“Since Shaul Mofaz was elected to lead the party, it has been cleaned up and it began paying its debts in an orderly fashion.”

Hadad said he would also sue Livni’s party, because she was in charge of Kadima during his employment and her party will assume some of Kadima’s debts as part of the split in the party.

But he said he would wait until after the January 22 election to file the lawsuit.

Hadad added that getting the court to freeze even part of Kadima’s assets was a significant accomplishment.

The Tzipi Livni Party declined to comment.

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